Families, Neighborhoods and Government Could Save Millions of Dollars

Neighborhood Housing Services of Beloit Says Quality Pre-purchase Housing Counseling and Education Makes First-Time Homebuyers One-Third Less Likely to Have Serious Mortgage Trouble Compared to Similar Homebuyers


What Works to Help Families

Beloit, WI – NHS of Beloit today announced the results of new research on the effectiveness of NeighborWorks pre-purchase housing counseling and education that shows that homebuyers who received such advice were one-third less likely to fall behind on their mortgages 90 days or more, two years after taking out the loan, compared to homebuyers who didn’t receive similar counseling and education. The research was done for [quote float=”right”]homebuyers who received such advice were one-third less likely to fall behind on their mortgages…[/quote]NeighborWorks America, a national nonprofit affiliated with NHS of Beloit, by Neil Mayer and Associates and Experian, and is based on approximately 75,000 mortgage loans originated in 2007, 2008 and 2009.

“Mortgage delinquency and foreclosure continue to be stubbornly high here in the Stateline area and throughout the country. This new research clearly tells us what works to help families with their housing issues ahead of time, staving off family stress, financial difficulties and costs that are borne by neighbors and the city,” said Shelley Cousin – Executive Director.

Educated Homeowners
Less Likely to Default

Beloit Homeowner Education

The research findings have important implications for NHS of Beloit and the entire housing counseling and education industry. “While we have long known anecdotally that pre-purchase housing counseling and education provided by certified professionals that work at NHS of Beloit is effective at helping to create homeowners who are less likely to default, this research actually proves it,” said Shelley Cousin.

The research could also become an important tool for lenders in the Stateline area. Because homebuyers who receive NeighborWorks pre-purchase housing counseling and education are less likely to be three months or more late on their mortgage, the likelihood of foreclosure or other default related costs are reduced, helping a lender’s or servicer’s bottom line.

“Supporting pre-purchase housing counseling by certified staff affiliated with NeighborWorks organizations like ours is a win-win for the homebuyer and the mortgage industry,” said Shelley Cousin.

Helping Keep Communities Stable

Helping Build CommunityThe NeighborWorks America research shows how a small investment up front that finances the availability of pre-purchase housing counseling and education can help homeowners avoid financial losses by potentially staving off serious delinquency that has a good chance of extending into foreclosure, help prevent disruption of family life, and help keep communities stable that might be hurt by home foreclosure.

Estimates vary, but total losses due to foreclosure borne by local governments, servicers and households can exceed $50,000 per foreclosure, according to a report from the Joint Economic Committee of the U.S. Congress.

Pre-purchase Housing Counseling

According to the Mortgage Bankers Association National Delinquency Survey for the fourth quarter of 2012, the percentage of residential mortgage loans 90 days or more past due across the country was 6.78 percent, and 3.74 percent of homeowners nationwide were in foreclosure. By providing NeighborWorks pre-purchase housing counseling and education to more consumers, it’s likely that tens of thousands of the more than 1.5 million homeowners who received a default notice in 2012 may have been able to avoid entering foreclosure.

Repeat Homebuyers

[quote float=”right”]Research shows that even repeat homebuyers benefit…[/quote] Interestingly, the NeighborWorks America research shows that even repeat homebuyers benefit from receiving NeighborWorks pre-purchase housing counseling and education. According to the report, repeat homebuyers who received the services also are about one-third less likely to fall 90 days or more behind in their mortgages than repeat homebuyers who didn’t receive NeighborWorks pre-purchase housing counseling and education.

One Thing is Clear…

“More analysis of the data is required to determine the factors for the repeat homebuyer results,” said NeighborWorks America CEO Eileen Fitzgerald. “But one thing is clear from the data: housing counseling is effective, even if you’ve been a homeowner before.”